10 July 2004	Saturday	21 Jamadi-ul-Awwal 1425

NEW DELHI, July 9: Indian Finance Minister P. Chidambaram was quoted on Friday as saying that a steep increase he proposed in the defence budget for the year 2004-05 was a one-time affair prompted by arms deals signed by the Vajpayee administration.

Mr Chidambaram told the Business Line newspaper that the Congress government had inherited certain commitments which should not be construed as an aggressive posture towards India's neighbours.

Asked if India was becoming a big-time defence spender, he said: "No, it does not signal anything. On the contrary, we are committed to the peace process." India is currently engaged in a peace process with Pakistan and China, following long stretches of uneasy ties with both.

"We took over an economy that was resilient, with very comfortable forex exchange reserves," Mr Chidambaram said. "But we also took over when crude oil prices shot through the roof and the American economy was probably overheating."

In reply to a question whether he had got empty coffers from the Vajpayee administration, he said: "There is no such thing as empty coffers - that's just political rhetoric - money is a flow. But we were also handed over huge defence capital expenditure for defence."

Asked why he had decided to double capital expenditure for defence, he said: "Those are one-time extraordinary demands, contracts have been signed. But except for the post-Kargil year, please look at defence capital expenditure, it has virtually stagnated."